Indian Government To Tax Angel Funding

I'm sure the devil... by davidwr · 2012-03-18 09:38 · Score: 2, Insightful

... is in the details.

--
Knowledge is how to play a game, intelligence is how to win, wisdom is knowing what game to play.

Re:I'm sure the devil... by FatdogHaiku · 2012-03-18 13:58 · Score: 2

... is in the details.
Empirical data indicate he's still at the capital... every capital... like usual...

--
You have the right to remain sentient. If you give up the right to remain sentient, you will be elected to public office
Re:I'm sure the devil... by Anonymous Coward · 2012-03-19 01:54 · Score: 0

I see what you are trying to imply, but the Dutch government's seat is The Hague while the capital is Amsterdam...

Selling shares is debt, not income by EmagGeek · 2012-03-18 09:44 · Score: 5, Insightful

It's clear the legislators have zero clue what investment means.

When a company receives startup funding, it is in exchange for ownership shares. That makes it borrowing, not income. Shareholder Equity offsets that funding on the balance sheet.

Re:Selling shares is debt, not income by LostCluster · 2012-03-18 09:50 · Score: 3, Informative

Bonds are debt, stock is ownership.
Re:Selling shares is debt, not income by khallow · 2012-03-18 10:14 · Score: 2

Bonds are fixed sized claims on future income. Stock is a claim on ownership. They aren't that different. Both engender an obligation in the corporation in exchange for money.
Re:Selling shares is debt, not income by whoever57 · 2012-03-18 10:21 · Score: 5, Interesting

It's clear the legislators have zero clue what investment means.
True enough.

When a company receives startup funding, it is in exchange for ownership shares. That makes it borrowing, not income. Shareholder Equity offsets that funding on the balance sheet.
Now you are showing your ignorance. It's not a loan. It's not borrowing.

But the summary doesn't tell the whole story (I know, what a shock!):

There is a Budget proposal to tax at 30 percent any investment received by closely held companies where the aggregate investment exceeds the fair market value of shares.

Most likely, this is aimed at money laundering. The uncertainty caused by this and the possible corruption amonst those who enforce this are likely to stifle angel investment.

--
The real "Libtards" are the Libertarians!
Re:Selling shares is debt, not income by Anonymous Coward · 2012-03-18 10:46 · Score: 2, Informative

A company that issues a bond is obligated to pay interest on the bond and to return the principal when the bonds mature. A company that issues stock has no obligation to pay dividends or to buy back the shares. If a company goes bankrupt bondholders are at the front of the line to get repaid. Common stock holders are at the back of the line and only get what is left after everybody else has been repaid.
Re:Selling shares is debt, not income by therealobsideus · 2012-03-18 10:59 · Score: 1

Keyword there... common stockholders. Most angel investors (at least the smart ones) receive convertible preferred stock and typically recoup their investment if the business fails.
Re:Selling shares is debt, not income by khallow · 2012-03-18 11:54 · Score: 1

A corporation does as per its bylaws have to follow the direction of its stockholders in various things, such as leadership of the corporation and disposition of assets outside of bankruptcy. That is the obligation to stockholders.
Re:Selling shares is debt, not income by Anonymous Coward · 2012-03-18 13:20 · Score: 1

If I own something that is in your possession, you are borrowing it from me. The OP is correct in that ownership of stock creates a "debt-like" obligation, where the company is in possession of the actual assets, but where the stockholder owns the equity (which is assets - debt). It's not per se debt, like bonds, but it is an instrument where the assets you hold are owned by me, and you are borrowing them from me in order to make money for me.
I believe you are simply being pedantic here. Most people understand what the OP is talking about.
Re:Selling shares is debt, not income by Ihmhi · 2012-03-18 14:06 · Score: 2

India's government is just as corrupt as most other governments in the world. They just don't give as much of a shit about hiding it.

--
Random Thoughts From A Diseased Mind (Not For Dummies)
Re:Selling shares is debt, not income by Anonymous Coward · 2012-03-18 15:38 · Score: 0

Then why are shareholders creditors if a company goes into administration/liquidation/bankruptcy etc.?
Re:Selling shares is debt, not income by KiloByte · 2012-03-18 21:40 · Score: 1

The US government instead declares corruption legal.

--
The creatures outside looked from Alt-Right to Antifa; but already it was impossible to say which was which.
Re:Selling shares is debt, not income by gl4ss · 2012-03-18 21:47 · Score: 1

well.. maybe someone in india started selling stock in his company rather than say, milk, and giving access to milk if you had company stock. thus dodging sales tax.
of course, what sucks about this for indians is that this is higher than usual expected roi for worthwhile investing.. "haha".

--
world was created 5 seconds before this post as it is.
Re:Selling shares is debt, not income by sociocapitalist · 2012-03-18 23:13 · Score: 1

Most likely, this is aimed at greedy and ignorant politicians wanting to tap an inflow of money and has nothing to do with targeting money laundering.
FTFY

--
blindly antisocialist = antisocial
Re:Selling shares is debt, not income by CountBrass · 2012-03-19 00:26 · Score: 1

I disagree with your statement: India is one of, if not the, most corrupt democracy in the world.
It wasn't always. Under British Rule Civil Servants were paid a good wage and enforced the law. When they gained independence their wages were cut severely and so they developed new sources of income to maintain their status and the result is endemic corruption.

--
Bad analogies are like waxing a monkey with a rainbow.
Re:Selling shares is debt, not income by ryzvonusef · 2012-03-19 02:33 · Score: 1

Not precisely. The Wages weren't cut, they just become worth less every year. My dad was in the civil service, and he tells me that when he started, even the top ranked non-officers at that time were like kings, enjoying cigars and living a lavish lifestyle, and the officer grades even more so. When my dad retired at the same rank, he barely made his expenses meet, even though, his pay was, amount wise, much more than his seniors ever dreamed off.
What happened? The currency become worth shit, that's what. He compared the salary of a senior then and now with the price of gold at the respective times, as a simple standard. Then, one month's salary could buy at least 10 to 12 times more gold then what a senior's wage would get. It was a similar case with other items, even necessities. There was a disparity by a factor of at least five, even for basic necessities. When your salary starts buying you less, and does not even remotely match the inflation level, then even the most honest person looks towards less-than-kosher means, just to feed his family. And once you get started, you don't stop.
Countries with less corruption are the countries where a civil servant's wage is less affected by inflation, so he only indulges if he *wants* to, not because he *has* to. Places like India, the Govt announces a minor increase in wage in the budget, and by the time the increment actually comes, inflation has made the increased wage worth much less than the non-increased wage last month.

--
I am an ACCA student. Got a query on Accountancy/Finance? Maybe I can help!
Re:Selling shares is debt, not income by Ihmhi · 2012-03-19 02:57 · Score: 1

The US government declaring corruption illegal would be like the mafia threatening anyone doing a contract killing with getting whacked.

--
Random Thoughts From A Diseased Mind (Not For Dummies)
Re:Selling shares is debt, not income by ryzvonusef · 2012-03-19 02:58 · Score: 1

Yes, but those preference shareholders are still behind the creditors :P
The conga line, IIRC, goes something like this:
Liquidator's charge and commission (the grave digger takes his cut first :P)
Fixed charge debt holders
Floating charge debt holders
No charge bond holders (idiots :P)
Preference Shareholders
Common Shareholders
I believe I might have forgotten an item or two (employee unpaid holiday comes somewhere there too), but still, angel investing is a *very* risky business, and they typically demand *much* higher returns.

--
I am an ACCA student. Got a query on Accountancy/Finance? Maybe I can help!
Re:Selling shares is debt, not income by lgw · 2012-03-19 05:42 · Score: 1

That doesn't work any more, at least for large companies. The government steps in, tells the bondholders to get lost, and gives the remaining assets of the business to the biggest campaign contributors. Ask GM bondholders about the new conga line.
Also, startups almost never have bonds. The chain there is typically just bank loans -> preferred -> common.

--
Socialism: a lie told by totalitarians and believed by fools.
Re:Selling shares is debt, not income by Grishnakh · 2012-03-19 06:53 · Score: 1

Yep, both the USA and India have extremely corrupt governments. It proves that large countries just can't have a successful democratically-elected government; it doesn't work. Either you need to switch to an authoritarian government like China, or you need to break the country up into smaller sovereign countries (no, not with a federal government tying them together) in order to have an effectively-run country. The only country with a population over 100M that doesn't seem horribly corrupt and/or ineffective is Japan, and even they have serious problems (look at the mess that was Fukushima, and all the events that led up to it with them ignoring recommendations to build the sea wall higher). Plus, they have a very different culture, one that emphasizes honor, unlike western cultures (particularly American culture which extols greed). The next-largest democratic country without extremely-obvious corruption is Germany, at 82M, and then France and UK at 65M and 62M. Then there's Italy at 61M and they're famous for their corruption.
Re:Selling shares is debt, not income by ryzvonusef · 2012-03-20 01:57 · Score: 1

Hmm. well my knowledge was based on UK law, so the more you know. Btw, does anybody really know what *actually* happened with the GM bailout? Some concrete details? All I hear is, well, hearsay.
Also, true about the start up thing, should have realised that.

--
I am an ACCA student. Got a query on Accountancy/Finance? Maybe I can help!
Re:Selling shares is debt, not income by lgw · 2012-03-20 09:28 · Score: 1

The bondholders "voluntarily" did not get the payout that law and tradition demanded. The pension fund got preference. The white house was aggressive in forcing bondholders to accept the deal - but just how aggressive is mostly rumors.

--
Socialism: a lie told by totalitarians and believed by fools.

Equity by alexander_686 · 2012-03-18 09:47 · Score: 2

Selling shares is selling equity - which is kind of the opposite of debit. Well, assets are the opposite of debit, but I am sure that is were part of the cash will go..

Re:Equity by Anonymous Coward · 2012-03-18 09:57 · Score: 0

Wait.. I would expect investment transaction on a company balance sheet to include a debit on the cash assets and a credit on the equity. IOW, the company and the investor agree on a valuation, and we simply transform, say, 50% of the company's value to 50% of the cash valuation of the company.
From the investors' perspective, I would expect the transaction to simply be a pure asset transaction -- the debit would account for the new ownership I have in this new company I'm investing in, and a credit for the loss of cash.
Re:Equity by khallow · 2012-03-18 10:07 · Score: 1

Selling shares is selling equity - which is kind of the opposite of debit.
The point is that the corporation is receiving money in exchange for creating a substantial future obligation on the income of the business. (This incidentally means that selling equity is not an "opposite" of debt in any sense of the word. The debit is the shareholder equity as EmagGeek explained.) And it sure isn't income any more than debt is.
Re:Equity by alexander_686 · 2012-03-18 10:10 · Score: 5, Informative

Equity = Assets - Liabilities
The investors trades cash for shares with the company - So your right there. On the other hand, for the company the new cash, an asset, is coming into the company, This will increase both the asset account and the equity account.
The accounting transactions would be
Credit the cash account in Assets
Debit the Paid In Capital account in Equity.
If the company was issuing new debt - and thus no new equity, the accounting transactions would be:
Credit the cash account in Assets
Debit the Long Term Debt Account in Liabilities.
Re:Equity by Anonymous Coward · 2012-03-18 10:18 · Score: 1

"This will increase both the asset account and the equity account"
Right.. why would it be a credit on the cash account if we're increasing the asset? And why aren't we debiting if we're increasing the equity account?
Re:Equity by Anonymous Coward · 2012-03-18 10:44 · Score: 0

This post is, of course, the exact wrong way round
Raising equity is DR cash, CR shareholders' funds
Raising debt is DR cash, CR long-term liabilities
Re:Equity by sycodon · 2012-03-18 11:58 · Score: 0

Doesn't matter what you call it, what you do with it or where you got it from, Government will always want part of it.
Did Ted Kennedy get reincarnated in India?

--
When Fascism comes to America, it will call itself Anti-Fascism, and tell you to give up your guns.
Re:Equity by Anonymous Coward · 2012-03-18 23:43 · Score: 1

If the company was issuing new debt - and thus no new equity, the accounting transactions would be:
Credit the cash account in Assets
Debit the Long Term Debt Account in Liabilities.
Issuing debt? I think your equation is a little bit off. Companies issue debt for cash, they don't purchase debt with cash during the issuance. It would be a debit to cash and a credit to notes payable, bonds payable, or some sort of equity stock...You have the equation for purchasing debt.
Either way this move doesn't surprise me as the red tape in india and the bureaucracy is far more complex, time consuming and ludicrous than anything that we have seen in the west. I would suggest taking a look at the "Commanding Heights" Videos to gain a much better insight. Great series that covers India, Russia, the UK and the US on this very subject.
Re:Equity by Anonymous Coward · 2012-03-19 00:15 · Score: 1

Doesn't matter what you call it, what you do with it or where you got it from, Government will always want part of it.
Did Ted Kennedy get reincarnated in India?
Not just any government, the Indian government is one of the most corrupt and self-serving in the world, so much so that corruption has become a common part of life over there. When you ask yourself how something needs to be done in India, you always start with finding out everybody that you have to bribe.
Re:Equity by stdarg · 2012-03-19 01:44 · Score: 1

I think there's a good argument for taxing the sale of new shares as capital gains. The company created the new shares at a cost of $0, and sold them for profit. It's no different than if an employee of the company created something for $0 (out of the goodness of their heart) and the company sold it for a profit.
Imagine applying the same thing to something like a painting. You buy a painting and it doubles in value. Instead of selling the painting, you sell a 100% share in the painting, and then claim that money is not income since you created a substantial future obligation on the future income of the painting (if it's really truly "sold" in the future you get nothing).
Of course, what normally happens is the money from the sale goes immediately into buying things to improve the business, thus the income and the expenses cancel out and there's no net profit to tax. At that's what I assumed up until now.. maybe there is some special rule about stock sales?
Re:Equity by ryzvonusef · 2012-03-19 02:50 · Score: 1

I believe you are mixing up "debt" with "debit"
In any case, Equity isn't precisely the "opposite" of Debt (liability), they way you are taking it to mean "opposite" of Asset.
Cash is an asset. Equity and Debt are both, in a way, a liability for the business, that is, an obligation to repay. In simple terms, Equity simply clarifies, that this portion is owed by the business to the *Owners*, and not to outsiders like "Liabilities" are. Both want a return on this amount, but the return is different.
I believe this may be clarified by a simple equation:
Asset= Equity + Liability
Hope that helped.

--
I am an ACCA student. Got a query on Accountancy/Finance? Maybe I can help!
Re:Equity by khallow · 2012-03-19 03:09 · Score: 1

I think there's a good argument for taxing the sale of new shares as capital gains.
No capital was gained. It was merely exchanged. And the only businesses where this is the means of profit, are fraudulent pyramid schemes.

It's no different than if an employee of the company created something for $0 (out of the goodness of their heart) and the company sold it for a profit.
Sure, it is. Value was created and profited from.

You buy a painting and it doubles in value. Instead of selling the painting, you sell a 100% share in the painting, and then claim that money is not income since you created a substantial future obligation on the future income of the painting (if it's really truly "sold" in the future you get nothing).
You own the cash after the transaction. In the case of selling shares, the company does. The money still needs to be either pulled out of the company or used by you for personal purposes in order for you to profit from that infusion of cash. Either is taxable in my part of the developed world (and I bet the same goes for India).

In real life, you can borrow money using the painting as collateral. There's probably some places that would consider that capital gains, but I think most wouldn't.

Of course, what normally happens is the money from the sale goes immediately into buying things to improve the business, thus the income and the expenses cancel out and there's no net profit to tax. At that's what I assumed up until now.. maybe there is some special rule about stock sales?
Somebody's got to have them. But my understanding here is that most places treat money in a corporation differently than money you personally have, even if the corporation is solely owned by you. If you start using it for personal reasons, then you can be taxed on those expenditures (and perhaps more of the expenditures of the corporation). But if you don't, then money in the corporation isn't taxed, until it is withdrawn, say as dividend payouts.
Re:Equity by Grishnakh · 2012-03-19 06:45 · Score: 1

Yep, it's almost as bad as the USA, except that most of the corruption in the US is at higher levels. Just don't get in trouble with the cops for some bogus charges trumped up by the DA, however, as you'll lose your life savings to attorney fees to fight the charges so that you can avoid being shipped off to a corporate-owned prison and used as slave labor.

Wow by JWW · 2012-03-18 09:47 · Score: 4, Insightful

And her I thought regulatory uncertainty and IP law we stifling innovation.

The Indians are taking innovation killing to a whole new level.

Re:Wow by Anonymous Coward · 2012-03-18 10:00 · Score: 5, Insightful

Don't be live the summary. The Indians are worried about tax dodges exploiting a loophole by pretending it is investment when it is just hiding cash in a shell organization.
Re:Wow by Sir_Sri · 2012-03-18 10:10 · Score: 4, Informative

Sure they are. That's not the point. Everyone knows india is corrupt top to bottom, and there are people using every means possible to dodge tax, legally or otherwise.
The issue is whether or not the law would, if applied, seriously stifle investment. Which, assuming the text is correct, it would. The intent of laws and there impact don't always align, this seems to be one of those cases, where either the people who wrote the law don't really grasp the spillover effects, or the people who are writing about it don't understand what the law says.
Now the thing is, lots of countries have 'double taxation' where the profits a corporation makes are taxes, *and* the dividends to shareholders are taxed. In this case they're saying investment in the company would be taxed as well, which could be triple taxation, or it could just be a stupid way of trying to collect existing owed taxes.
And yes, of course, if you set up your own business and invest in it you could be trying to dodge tax (Sri's game testing and cat sitting services, who's sole customer is Sri, who is, incidentally, the sole investor). I don't dispute the possibility of that being widespread and damaging to the economy and tax base.
Re:Wow by ExploHD · 2012-03-18 10:46 · Score: 0

lots of countries have 'double taxation' where the profits a corporation makes are taxes, *and* the dividends to shareholders are taxed.
That's not double taxation; the government is taxing the dividends of shareholders as capital-gains because dividends reduce the stockholders equity by the amount of the dividend. It would be no different if you sold your sock at x amount of dollars or x - dividends.

Right now dividends are being used as a tax dodge because the max tax rate on capital gains in the US is 15% and no FICA. If you work your ass off at a job you're going to being paying your tax bracket plus FICA. Why do you think some CEO's have a dollar salary; it's not for show.
Re:Wow by Sir_Sri · 2012-03-18 11:32 · Score: 1

hence the quotes. Just because it isn't always real double tax doesn't mean that isn't the talking point or the way the public generally understands it.
I'm not in the US, so I'm not familiar with FICA particularly, nor was it in reference to US law. As I explicitly said "lots of countries".
Re:Wow by Anonymous Coward · 2012-03-18 12:13 · Score: 0

Knowing why something is being do be is the point, it helps establish what to do with any problems.
Just like with the inland US state planning on acquiring an aircraft carrier, the reasons shape your response.
In that case, ridicule.
In this India situation, it's dismiss the poor analysis.
Re:Wow by khallow · 2012-03-18 14:21 · Score: 3, Insightful

That's not double taxation
Sure it is.

Dividends are paid from corporate income which is already taxed. Capital gains usually are a result of reinvestment in the corporation which is not taxed as corporate income.

Right now dividends are being used as a tax dodge because the max tax rate on capital gains in the US is 15% and no FICA.
Dividends are considered income in the US not capital gains. And no FICA makes sense since the income is coming from an investment. If you're investing, then you're not the problem Social Security was meant for.
Re:Wow by Anonymous Coward · 2012-03-18 15:14 · Score: 0

Dividends are a distribution of profits - they are taxed in the US at ordinary income rates. Increase in the market value of stocks and selling those at a profit are capital gains and taxed at the 15% rate. So, the trick is to get paid in what are basically pieces of paper and then seeking them off as capital gains at the lower rate. That's why all these execs are paid in stock options...
Re:Wow by gl4ss · 2012-03-18 22:03 · Score: 1

so they're thinking they'll just TAX when people are hiding cash when they shouldn't have in the first place? yeah that'll work fine!

--
world was created 5 seconds before this post as it is.
Re:Wow by Anonymous Coward · 2012-03-19 01:34 · Score: 0

You're still helping push the Overton window towards the people who take double taxation seriously, as you're using their language and assumptions uncritically and without immediate caveat. I don't see anyone calling income tax + sales tax a double taxation, it only seems to come up with respect to capital gains which unsurprisingly benefits the rich much more than the average joe.
Re:Wow by TheSync · 2012-03-19 05:33 · Score: 1

Dividends are considered income in the US not capital gains.
More precisely, since 2003, non-qualified dividends (on stocks held under 60 days) are taxed at your normal income tax rate, but qualified dividends (on stocks held more than 60 days) are taxed at a 5% or 15% rate based on your income level.
The Obama Administration has recently suggested ending the tax benefit for qualified dividends for high income individuals and them pay ordinary income tax rates on all dividends.
Re:Wow by khallow · 2012-03-19 05:51 · Score: 1

I stand corrected then. And I see the Obama administration has yet to run out of destructive proposals.
Re:Wow by Sir_Sri · 2012-03-20 07:01 · Score: 1

Er... no. This is 'unintended consequences'. I don't want you to drive drunk, so what I'm going to do is ban cars from parking within 8Km of an establishment that serves alcohol would be an example of 'unintended consequences'.
I can't really judge the spillover effect in detail, not being an indian economist, but it seems unlikely to accomplish any of its goals, and is just bad law. This wouldn't be the first bad idea for a law ever proposed after all.

Tax too high and it stops. by LostCluster · 2012-03-18 09:48 · Score: 3, Insightful

If they charge 130 to get a 100 investment... the business must go up 30% in order for the investor to make a profit. Better off taking that money to another market where you can get 130 for your 130. This idea stinks.

Re:Tax too high and it stops. by bill_mcgonigle · 2012-03-18 10:02 · Score: 2, Interesting

This idea stinks.
Not if you're the incumbent the startup is about to compete against. Cui bono.

--
My God, it's Full of Source!
OUTSIDE_IP=$(dig +short my.ip @outsideip.net)
Re:Tax too high and it stops. by Anonymous Coward · 2012-03-18 10:37 · Score: 1

India doesn't have a lot of native incumbents.
Re:Tax too high and it stops. by biodata · 2012-03-18 10:55 · Score: 1

You may not have noticed companies like the $100Bn Tata.

--
Korma: Good
Re:Tax too high and it stops. by blackraven14250 · 2012-03-18 15:12 · Score: 0

Tata isn't exactly a startup that this would affect...
Re:Tax too high and it stops. by green1 · 2012-03-18 16:01 · Score: 1

I think Tata was being used as an example of an incumbent this law might help (by stifling the competition) rather than an example of a startup that might try to compete with it and get hurt by this...
Re:Tax too high and it stops. by JTsyo · 2012-03-19 06:22 · Score: 1

30% of 130 is not 100, just saying.

Coming to an anti-capitalist country near you by mysidia · 2012-03-18 09:53 · Score: 3, Insightful

Stock split taxation.... What, you owe stock, and, the number of shares you have is doubled? Now you will have to pay a 30% share price tax on your increase in shares.

Credit card taxation.... spend $$$ on a credit card, sounds like free money, you will have to pay 30% of your credit card spendings to the government.

Auto purchase taxation... what, free money from the bank? OK, but you will owe 30% of your auto purchase in taxes.

Mortgage taxation.... what, more free money? OK, but you will have to pay 30% of the money you get from your mortgage back to the government.

Sold your home for less than you bought it for? Oh, it still looks like you got lots of money from selling it. We will have to charge a 30% tax on this windfall income.

Re:Coming to an anti-capitalist country near you by BenJury · 2012-03-18 10:23 · Score: 1

HA! There are already here!

Stock split taxation.... What, you owe stock, and, the number of shares you have is doubled? Now you will have to pay a 30% share price tax on your increase in shares.

Capital gains tax is applicale to the selling of shares.

Credit card taxation.... spend $$$ on a credit card, sounds like free money, you will have to pay 30% of your credit card spendings to the government.

VAT.

Auto purchase taxation... what, free money from the bank? OK, but you will owe 30% of your auto purchase in taxes.

Also VAT, plus fuel duty and VED.

Mortgage taxation.... what, more free money? OK, but you will have to pay 30% of the money you get from your mortgage back to the government.

Stampy duty.

Sold your home for less than you bought it for? Oh, it still looks like you got lots of money from selling it. We will have to charge a 30% tax on this windfall income.

Also subject to capital gains tax if it's not your main home. Regardless of stamp duty.

--
Blatant Advert: Android Apps!
Re:Coming to an anti-capitalist country near you by mysidia · 2012-03-18 10:56 · Score: 4, Informative

Capital gains tax is applicale to the selling of shares.
Let me explain how that's different: Capital gains tax is (PROCEEDS OF SALE) MINUS (COST BASIS)
Currently you don't pay any taxes on a stock split and don't necessarily pay taxes on capital distributions either (your cost basis is decreased). What happens with a stock split is the number of outstanding shares are doubled in a 2:1 split, so you wind up with twice as many shares, each worth half their original share price.
In a normal 2:1 stock split, you don't get any cash, only additional shares of stock that are distributed to you, but all shares (including the ones you already hold) are now only worth half as much a share in the company, so your total share in the company remains the same after the split.
VAT.
Let me explain how VAT is different. VAT is a tax you pay on the purchase. Currently you don't pay an additional tax on the actual you money you borrow on the credit card. Currently debt you take out is not treated as income.
Also subject to capital gains tax if it's not your main home. Regardless of stamp duty.
Currently you only pay capital gains tax if you sold the home for more than your Adjusted cost basis, (Purchase Price) Plus (Property Improvement Costs) Minus (Depreciation)
Re:Coming to an anti-capitalist country near you by GryMor · 2012-03-18 11:01 · Score: 1

Stock Split: No capital gains, you didn't sell/buy anything (value of a share was halved, quantity was doubled)
Credit card: No VAT, the VAT is on what you used the credit card to pay for (at least, in every country I've been in that had VAT).
Sold Home: No capital gains (capital loss, in fact) for the given example.

--
Realities just a bunch of bits.
Re:Coming to an anti-capitalist country near you by zippthorne · 2012-03-18 11:11 · Score: 1

I notice that "adjusted cost basis" does not appear to account for inflation....

--
Can you be Even More Awesome?!
Re:Coming to an anti-capitalist country near you by mysidia · 2012-03-18 12:23 · Score: 2

I notice that "adjusted cost basis" does not appear to account for inflation....
Indeed it does not. You also still pay taxes on interest earned in a savings account, even if inflation during the year was higher than the interest earned -- so that in fact, your purchasing power was eroded during the year by more real dollars than the actual increase.
It's a fundamental flaw and unfairness in the way that income taxes are devised -- they tax numerical change in number of dollars, instead of taxing numerical change in the usefulness of the money you have for purchasing products.
In a fair system, during times of deflation, you would have a 'synthetic income' based on the increase of value of your money, and during times of inflation, you would have a 'synthetic loss' based on the change of value to your money; and the rate of taxation should also be adjusted properly.
Re:Coming to an anti-capitalist country near you by unixisc · 2012-03-18 16:07 · Score: 2

For the US, you forgot the one that takes the cake - AMT on imputed income. Namely, if you had stock options of $x, which you exercised when its price was $(x+y), you'd get taxed on the $y, even though you've not sold a single share and have actually made squat. Let's say you sold it during tax time to pay out that tax, and lets say you sold it when the price was back @ $x, then you essentially have to pay taxes on $y - money you never made, but only theoretically had.
Don't ask me for a car analogy to explain the above!
Re:Coming to an anti-capitalist country near you by neonKow · 2012-03-19 01:27 · Score: 2

Fair and unfair compared to what? There is a fallacy there in thinking that taxes are supposed to be a percentage of your income simply because that's how we've always done it. The truth is that taxation is no more than a way for the government to have an income to run the government and have public project an a military or whatnot.
It's not unfair because they're not trying to penalize you for having additional purchasing power. And it's not unfair if they tax all income equally (they don't, but that's a separate issue from whether you should have a 'synthetic income' in times of deflation).
Re:Coming to an anti-capitalist country near you by JTsyo · 2012-03-19 06:24 · Score: 1

hmm do I need to show the 1% I get as rewards from my CC as income?

Bad for India... by Nutria · 2012-03-18 09:55 · Score: 1

good for everyone else.

--
"I don't know, therefore Aliens" Wafflebox1

Thank you, India. by pubwvj · 2012-03-18 09:57 · Score: 4, Insightful

The rest of the business world thanks the Indian government for destroying India's competitive edge. Now it will be all the easier to compete against India. Rah-rah, India!

Why is it that government's just don't get it. They need business to provide jobs so they can have something to tax. Dummies.

Re:Thank you, India. by Anonymous Coward · 2012-03-18 10:32 · Score: 0

Different idea. Established leaders want to stamp out competition. So you 'invest' in existing companies and they create sub companies that hold your money. So it is not a 'angel investor' it is just someone investing in an existing company and someone who did not get money before gets a cut.
My bet is on something like that. It is being used to stamp out competition. Laws like these are usually written by incumbent companies who grab their local law maker and hand them a script. This sort of shit happens here in the US too. We just call it 'campaign contributions' instead of bribes.
http://stopthecap.com/2012/03/14/inside-alec-how-corporations-ghost-write-anti-consumer-state-telecom-legislation/
Re:Thank you, India. by scamper_22 · 2012-03-18 13:36 · Score: 0

The goal of all active governments in practice is to take from one group and give to the groups connected to the government.
They really don't care about 'the greater goals'.
It's basic gang like nature. Why do you think ghettos don't prosper? Everyone is out taking... and if you work hard and become successful, someone will just take from you. That everyone in the ghetto would be better off with an honest environment doesn't really matter.
The government gets it. It wants money to do things and it sees lots of money coming in right now. So it must get its cut.
Re:Thank you, India. by Anonymous Coward · 2012-03-18 21:55 · Score: 0

Americans are funny.
Re:Thank you, India. by Anonymous Coward · 2012-03-19 02:11 · Score: 0

Now now, GP may not be American, as what he said so far is correct: every government wants a piece of the pie for themselves (and those connected to them)
What would make him American (and Libertarian) is if he somehow believes that no other entity does it, and/or that government shouldn't be "allowed" to do it.
Life is all about grabbing a piece of the pie for yourself and those "connected" to you. "Business", "government", "crime", etc are all just means to that end. And nobody needs to be "allowed" to go grab a piece of pie. A lion does not care if it is "allowed" to eat the gazelle
Re:Thank you, India. by pubwvj · 2012-03-19 07:55 · Score: 1

Anonymous cowards are funny. They are so pathetic they can't even climb out from under their rock.
Re:Thank you, India. by cramoft · 2012-03-19 11:24 · Score: 1

This might also cause many Indians that left the US, to create a startup, to reverse their thinking and finish the startup up here.
Re:Thank you, India. by Anonymous Coward · 2012-03-20 05:56 · Score: 0

Listen mate, I checked out your site and you seem alright to me, but I don't think you should be so quick to judge - I simply don't have an account.
I stand by my point, obtusely made, which is that there is a breed of anti-government thinking in America that seems to be completely separated from reality; reality being that there are lots of things that require broad based cooperation, for example, you and me communicating on the internet, and those cooperative efforts *always* end up needing some kind of structure to keep things going: that is government.
It is fine to contest governmental action - they seem worldwide to be supremely capable of cocking up even the most trivial of things, and spending an inordinate amount of money in the process - but statements like 'The goal of all active governments in practice is to take from one group and give to the groups connected to the government' are just a fiction. That sentiment is so far from the truth, misses out on so much complexity, and is so completely cynical, that it, in my opinion, makes any sensible confrontation of the issues impossible.
To put it personally, it looks like you have a really nice place up there in Vermont, and I presume you wouldn't like some wealthy resource company to come in there and tell you to piss off because they've decided they own it now? You might say that things like that happen under governments, which I do not contest, but without them there would be nothing in the way - we need these communal structures to keep our fantastically privileged lives in good condition.
And by the way, my name is Chris Hughes. No rocks here.
Re:Thank you, India. by scamper_22 · 2012-03-20 06:36 · Score: 1

I'm Canadian actually.
And no, this is not a rich/poor thing.
Most governments take from the poor and give to the well connected in government/businesses.
I don't see how you claim it is fiction. Just look at public sector unions who have pensions far greater than that of the average person... who then have to be taxed to pay for those pensions. Or the bank bail outs. Or big spending on the military...
Is it complex? Of course.
Is a certain level of common infrastructure and law needed? Of course.
But at the end of the day, that is government as we know it today. It is not cooperative. It is gang-based. If you think it is cooperative, you're probably just a member of such a gang.
The bigger and more discretion a government has, the more gang-like in nature it is.
I'm not anti-government, if they treated all citizens universally and worked towards fair simple laws. But that is not how most government's work... especially india (I'm Indian) ... known for its corruption and gang politics.
Re:Thank you, India. by Anonymous Coward · 2012-03-20 07:42 · Score: 0

Regarding my assumption about your nationality - it was a guess based on reading your past posts; apologies for the error.
Please don't think I am being pedantic, but your statement was 'the goal of all active governments in practice is to take from one group and give to the groups connected to the government.' It is the sentiment encapsulated in this statement that I take objection to, however nuanced the thoughts of the speaker. As I wrote in my reply to pubwvj, it is a very cynical rhetoric, and ignores many realities.
There are numerous people working at all levels of government all over the world to try and make things work, and it is not their goal, stated or otherwise, to 'take from one group and give to [their associates].' It certainly happens, and yes, India is a prime example. I have very close friends living there (Indians) and they report things exactly as you say, gang politics and terrible corruption. That does not, however, make self-interested redistribution the aim of government, and does not (or should not) tarnish the reputations of the individuals or institutions that are working to actually help people. I know of a number of people there who are government employees, but I would find it very offensive if you were to suggest that they were considering themselves, rather than working for 'the greater goals' as you put it.
For me, the best evidence is that offered by history. I hope you will agree, without qualification (because my instant referencing skills are failing me), that stable government corresponds pretty well with good living standards, across the broad sweep of history. The obvious rebuttal is that only ever holds if you are on the correct side of the government in question, which I think has been broadly true, but I would counter that that is simply an argument for either a persistant benevolent dictator or a strong democracy - one in which the people have real control over the people in power.
From your post(s) I'm not really sure you would contest too much of that, but you still express your opinions on the problem in a way that I would say is diametrically opposed to the way I think about it. This is probably unfair, but the way I see the two points of view is this (apologies for any bias, but you should get the general idea):
you: governments are the problem, they take from the people and use the proceeds for their own purposes
me: private interests are the problem, they exploit governmental weakness and use the proceeds for their own purposes
This might amount to the same thing in practice, but I just can't accept that, in a conceptual sense, it's *the government* that is the problem, which is what your statement implied; I would argue that it is the people who are exploiting it who are the problem. I'm pretty sure we could both agree on kicking them out of power, and probably straight into prison if there was any justice in the world. Quick anecdote from the beloved daily mail: http://www.dailymail.co.uk/news/article-2077784/Labours-botched-PFI-deals-sent-NHS-costs-soaring.html is that "government" to blame or the people screwing them over?
For reference I don't think I am a member of any kind of gang, although my current studies are I guess government funded. In my defence against the charge of gang-membership I will add that the job I used to have was in the private sector, my previous degree was funded from that work, and I can assure you that my opinions aren't a recent development.
Chris

atlas shrugged by Anonymous Coward · 2012-03-18 10:02 · Score: 0

who needs to read the book atlas shrugged when we can just live it first hand, world wide

Understanding may not be the problem. by __aaltlg1547 · 2012-03-18 10:03 · Score: 4, Insightful

Major corporations would be FOR this sort of legislation. It prevents competitors from getting into your market.

Re:Understanding may not be the problem. by ErikZ · 2012-03-18 10:04 · Score: 2

Any established business, not just "Corporations".

--
Democrats or Republicans. They are both taking us to the same place and they are not afraid of us anymore.
Re:Understanding may not be the problem. by __aaltlg1547 · 2012-03-18 10:21 · Score: 2

Yes, but small established businesses may need investor funding to expand their operations and compete on a larger scale. They're getting screwed. Only the big boys who don't need outside funding benefit.
Re:Understanding may not be the problem. by Anonymous Coward · 2012-03-18 13:30 · Score: 0

Yep. Not just because of the static barrier to entry, but also because said corporations(or established businesses more correctly) have the political pull and knowledge to game the system and to get politicians to give them loopholes.
Re:Understanding may not be the problem. by Grishnakh · 2012-03-19 07:02 · Score: 1

"Major corporations" == "established business". You don't become a "major" corporation (as opposed to, say, a one-person "corporation") without becoming "established" first. Companies like Apple and Microsoft don't just spring up overnight with billions in revenue and start filing IP lawsuits against everyone.

Hey everyone lets starve Indias economy! by atari2600a · 2012-03-18 10:04 · Score: 0

We can start by implementing a 30% tax on business bootstrapping!

What an angel investor is. by JoshuaZ · 2012-03-18 10:09 · Score: 4, Informative

Neither the summary nor TFA said what this term meant. For those who don't know, essentially an angel investor is someone who invests their own money in a start-up or very young company in return for weak control of a part of the company.

Re:What an angel investor is. by cold+fjord · 2012-03-18 12:50 · Score: 1

Guy Kawasaki on Angel Investors

Who exactly are angel investors, and how do I know if they are an appropriate funding source for my company?
Guy Kawasaki's response:
Broadly defined, angel investors are high net-worth individuals who invest in entrepreneurial companies, usually at an early stage. Like institutional venture capital firms, many angel investors provide cash to young companies and take equity in return. One difference is that angel investors typically invest smaller amounts of money in individual companies than venture capitalists do, making them a possible resource for companies that have exhausted their "friends and family" financing options but are not ready to approach VCs for capital

--
much of left-wing thought is a kind of playing with fire by people who don't even know that fire is hot - George Orwell

India's Recent History by Anonymous Coward · 2012-03-18 10:13 · Score: 1, Interesting

After achieving independence, India tried to be a socialist state with a planned economy. Lots of their leadership was not merely socialist but Marxist. The planned socialist economy failed to improve life for nearly everyone there, but there are still lots of people in power who disapprove of capitalism and especially entrepreneurship. I think you'll find many in government who very much want to believe that the Angel Investors are in that top of that top 1% that deserves to be separated from their money and that they can easily afford a "mere 30%" tax. No matter that it will go to line the pockets of the bureaucrats rather than lift poor out of their poverty, something that India's economic "planners" have been unable to do since independence.

Re:India's Recent History by Anonymous Coward · 2012-03-18 10:27 · Score: 1

A lot of India's problems since independence has been caused by corrupt politicians. This looks like another opportunity to collect a bribe.
Re:India's Recent History by Anonymous Coward · 2012-03-18 16:12 · Score: 1

India's current finance minister - Pranab Mukherjee - who presented this budget - was a finance minister for several years during the 80s. Unlike prime minister Manmohan Singh, there is no evidence that he had ever converted his socialist views. So it's not surprising that such a hairbrained scheme should have come from him.
Re:India's Recent History by Anonymous Coward · 2012-03-19 02:41 · Score: 0

And since India removed trade barriers, opened itself up to foreign corporations and outside investment, life has just gotten so much better for the majority of Indians? All of the capitalist measures have not made life any better for the majority of Indian citizens.
Despite the fact that libertarians herald the small consumerist middle class in India as an achievement of capitalism, they conveniently tend to ignore the 400 million starving and impoverished people that capitalism hasn't addressed. India really isn't a better place for most people and the majority of its problems now have nothing to do with failed socialist policies but disgustingly corrupt government.
Re:India's Recent History by Grishnakh · 2012-03-19 07:09 · Score: 1

So you'd prefer things be the way they were decades ago, with the entire population impoverished, rather than at least having a relatively small middle class that's doing well? No one said capitalism was perfect, but it seems like it's doing better than whatever India was doing previously.

Doomsday scenario or ..... by slowLearner · 2012-03-18 10:15 · Score: 1

everyone will carry on investing like they did before and pay tax on their investments. It may cause some people to be more selective about who/what they invest in but I figure with a growth market like India things will carry on, innovators will still innovate and investors will still find ways to pay little or no tax.

Re:Doomsday scenario or ..... by alexander_686 · 2012-03-18 10:23 · Score: 2

For high risk, high return start ups, like tech, maybe not.
But it will dent the low risk, low return start ups. Got a nice little business that you want to start up, like a corner shop. Expecting 5 to 15% returns per year? All of a sudden you have pushed the break even point for the investor 5 years out into the future. piss poor returns here.
Re:Doomsday scenario or ..... by dbc · 2012-03-18 10:47 · Score: 2

I see you are posting under the handle "slowLearner". Why, yes, I'd say you are.
Re:Doomsday scenario or ..... by biodata · 2012-03-18 11:04 · Score: 1

If it's low risk, low return, you don't really need angels and they won't be interested in you. Try your bank manager.

--
Korma: Good
Re:Doomsday scenario or ..... by slowLearner · 2012-03-18 11:58 · Score: 1

oooooooooooo! why did I not see that one coming! (SLAPS HEAD).

My point is that when new taxes are announced business leaders ALWAYS claim that it is the end of the world as we know it. I have never seen any other reaction. DOOM followed by GLOOM followed by the END OF THE WORLD AS WE KNOW IT!
Sometimes they get their way, sometimes they don't, but I have never seen the collapse of all things.
Things change, laws change, taxes change all the time. Business and in particular Angel investors will still invest because that is how they make money. They won't suddenly stop investing in India because of the imposition of a tax on investment, but they sure as hell will say that they will in order to try to influence the government to change it's policy.
IF this change takes place and Angel investor stop throwing money around then come back and I we can talk then. I think that if investors see an new opportunities growing in India they will be off like a ferret down a drainpipe, because at the end of the day that is what they do, they use money to make money and as long as they get their returns they don't care.
Re:Doomsday scenario or ..... by dbc · 2012-03-18 12:17 · Score: 1

Everything interesting happens on the margin. India just moved the margin 30% further out. Angels can invest anywhere. Now India is going to be getting less of it. To argue otherwise is complete nonsense. I can not be as sanguine as you. Like it or not, there is global competition for investment. If this passes, India will have put up a "please invest elsewhere" sign in their front lawn.
I suggest you retake economics. Any economist, left-leaning or right-leaning, will tell you that is how the model works. You get less of what you tax. What they argue about is whether or not you are better off, on balance, with less of that thing you are taxing. It *is* going to matter, despite your wishful thinking. Will it totally kill investment? No, but it most definitely will reduce it, drive it underground, or drive more members of their entrepreneurial class to other countries.
Re:Doomsday scenario or ..... by slowLearner · 2012-03-18 13:01 · Score: 1

I don't think I actually said anything in my post that does not fit with what you have written above, aside from that I am not particularly sanguine, i just understand that business will squeal and holler like a stuck pig when it sees the bottom line being affected. I mainly turn down the volume of the hyperbole in my head from 11 to something a bit more reasonable.
You are right, tax more get less of something, I agree. But you also agree have to agree that investment will not stop. It may be at a reduced level but it will continue.
But I notice that you you also said "drive it (investment) underground", what you failed to mention is that business will evolve and investment opportunities will change.
I think what we are seeing a small group of extremely wealthy individuals tantrum because the rules got changed.
Are we going to see the death of investment in India? No
Are we going to see some changes in how investments are made and who invests there? Maybe.
Will the Indian government raise more taxes from the increasing disproportionately wealthy upper class? Probably not.
in the end there will be loop holes and there will be exemptions and things will go on!
They always do!

That is the point I was making.
Re:Doomsday scenario or ..... by phantomfive · 2012-03-18 18:32 · Score: 1

Uh, you know that tax changes actually do have real world consequences, right? Just because you haven't paid attention, doesn't mean there isn't any effect.

It should be intuitively obvious....if you increase the cost of something, fewer people will be interested in it. Adding a tax onto something increases the cost. If you want to decrease activity, put a tax on it.

Increasing taxes on investing decreases investment. People are going to change their investment strategies.....instead of investing in cool new products, they will invest in giving cheap, high-interest loans to poor people. Don't believe it happens? Look at America.

--
"First they came for the slanderers and i said nothing."
Re:Doomsday scenario or ..... by slowLearner · 2012-03-18 21:57 · Score: 1

Why do you assume that I haven't paid attention? Do you really think that the continuation of the Bush tax break in the USA to the already rich did anything but make them richer? If you do then you will probably never reach the end of this next few lines, cause you will be a denier.
Wealth tends to pool at the top, it doesn't tend to trickle down. It doesn't tend to distribute. Wealth attracts more wealth. If you want a fast way to get money into an economy you give it to poor people who have a hundred different things that they HAVE to spend it on. That money gets to work straight away by buying something, usually physical item or service, a bill or some food or a TV or some electricity or some rent. This contributes to the wider society straight away.
When the rich people get more money they save it or invest it, and by invest I mean that they buy things that will make THEM richer, they don't invest in the community they invest in themselves.
The odd philanthropist will buck the trend and invest in some good projects and will be held up as a poster child to show that the system works and that this is how the system is supposed to work and if only those damn lefties with their taxes would shut up everything would be fine.
What is the premiss of this whole argument? That I am supposed to give a rats ass that some multi-millionaire cannot build upon their wealth in India because they have to pay tax?
Angels can make 20 to 30 times there investment back from the initial loan (I admit that the average number is smaller than that but Angels don't play for average) even if the number is closer to the 2-3 times their investment, think of those numbers for a while and see if you think there should be some sort of Taxation involved.
In the poor places that sort of return on investment is usually only available to Loan Sharks and drug dealers.
So at the end if you could be bothered to read all of this and I haven't been modded out of existence they will still invest, because if they don't their pile of cash can only get smaller, even if they have to pay some tax, a little tax, they will still invest. They will still invest in India and China and USA and the UK and the Ukraine and any place that they can make money.
As I have said before it is what they do, it will not change!
Re:Doomsday scenario or ..... by gl4ss · 2012-03-18 22:08 · Score: 1

if it's just slapped on everyone, then it would affect farmers as well.
borrowing seeds would then have 30% added interest rate. fun?

--
world was created 5 seconds before this post as it is.
Re:Doomsday scenario or ..... by slowLearner · 2012-03-18 22:20 · Score: 1

Read this comment, it's not mine but should be modded up
http://slashdot.org/comments.pl?sid=2732783&cid=39400829
As I have said it is hyperbole, it is not real, it is a fiction to say that the investment will be taxed at 30% and you are falling for it.
Re:Doomsday scenario or ..... by swillden · 2012-03-19 02:01 · Score: 1

But it will dent the low risk, low return start ups.
Low-risk borrowers have lots of other options. Like banks, for example. High-risk, low-return operations, well, they're just not going to get funded regardless. Angel investment is all about high-risk, high-return.

--
Note to ACs: I usually delete AC replies without reading them. If you want to talk to me, log in.
Re:Doomsday scenario or ..... by phantomfive · 2012-03-19 03:53 · Score: 1

heh, milk the serpent for everything it's worth, eh? "We can tax them, and it won't affect their behavior." I hope you understand how stupid you sound saying that.

Also, I don't know what Bush tax cuts have to do with this situation. I like them though because they gave money to me, and other non-rich people like me.

--
"First they came for the slanderers and i said nothing."
Re:Doomsday scenario or ..... by slowLearner · 2012-03-19 07:48 · Score: 1

And that doesn't refute my argument one iota. You are just trying to sum up my argument in puerile and facile way to belittle the ramifications of it. I agree Bush tax cuts have little to do with the situation in India but I hold them as an example of how not to tune your tax system. Remember that taxation or the Rich under Bush fell to it's lowest since before the great depression, increasingly the tax burden was shifted from those most able to pay to those least able to pay and the results have been pretty much the same. I notice that you say that you are non-rich, but it gave the very rich even more. What did you do with yours? invest it in a start up? or spend it on stuff you needed?
Re:Doomsday scenario or ..... by phantomfive · 2012-03-19 14:02 · Score: 1

And that doesn't refute my argument one iota.

Your argument is that you can increase the cost of something without affecting the actions of people. That's retarded.

Furthermore, you are saying that if we give money to people who immediately spend it, then the economy will be improved. Empirically speaking, that seems to be a net drain on the economy (based on studies of the Obama tax cut, the Bush tax rebate, and the similar Carter payroll tax cut). Robert J Barro suggests that such spending as you suggest might be effective if unemployment is high (say, over 15%). In other words, you have that idea, but you haven't checked your numbers.

And that's your problem all over. You've read some ideas about economics, maybe that you got from some blogs, but ultimately, you don't know jack. You don't know the data or reasons to back up your opinions.

You might want to read this, because you're probably falling into that mental trap too.

--
"First they came for the slanderers and i said nothing."
Re:Doomsday scenario or ..... by slowLearner · 2012-03-19 18:55 · Score: 1

No my argument is that if even with the increase in tax on these investments that the returns that they are getting still make it worthwhile, therefore they will still invest.

The point I also made, I think, was that the article was hyperbole, that it was purposefully alarmist to try to influence the Indian government to try to stop the change in law. I still don't see anything that you say that will dissuade me of that belief.

The point that money should be given to the poor is more in general terms, with your example of the investor, I assume that the government would not just hand out cash in bags with no record as to where it went or what is being done with it and that there would be some accounting, I assume this because no sane person would fly in Billions of dollars to a place and not know where it went. I thought you might do me the same courtesy and assume that I might have a better plan then just handing out money willy nilly, but I guess I was wrong.
I may believe in tax in the rich but I also believe that people should work for money if they can do so. But I also think that the mark of a society is not how prosperous it is but how it cares for it's poor, dispossessed and it's sick
I think that may be enough for now.
Oh and Robert J Barro has opinions on many things that I find quite odious, but that is the problem with economics it's so damned fickle to the fates of fashion. What is wrong with a good bit of Keynesian economics
Re:Doomsday scenario or ..... by phantomfive · 2012-03-20 03:46 · Score: 1

No my argument is that if even with the increase in tax on these investments that the returns that they are getting still make it worthwhile, therefore they will still invest. The point I also made, I think, was that the article was hyperbole, that it was purposefully alarmist to try to influence the Indian government to try to stop the change in law. I still don't see anything that you say that will dissuade me of that belief.
Sure, bring out some data to support your position, and my 'belief' will completely change. Instead you say things like......

What is wrong with a good bit of Keynesian economics
Nothing, except when it's not supported by data.

--
"First they came for the slanderers and i said nothing."
Re:Doomsday scenario or ..... by slowLearner · 2012-03-21 18:43 · Score: 1

Sorry I've been away,
have a read at this part of the thread, I think that it supports my argument of hyperbole and FUD quite nicely.
http://slashdot.org/comments.pl?sid=2732783&cid=39400829
or do you want some other data, something of the gaps perhaps?
Re:Doomsday scenario or ..... by phantomfive · 2012-03-21 19:09 · Score: 1

It does support your point that this particular law is not a problem.

--
"First they came for the slanderers and i said nothing."
Re:Doomsday scenario or ..... by slowLearner · 2012-03-21 21:40 · Score: 1

Thank you
Re:Doomsday scenario or ..... by phantomfive · 2012-03-22 13:18 · Score: 1

Yup, good data always wins.

--
"First they came for the slanderers and i said nothing."

Investment by Anonymous Coward · 2012-03-18 10:19 · Score: 0

So the dude procuring these investments doesn't get anything in return? Tax that shit.

Slashdot rewards STUPID moderators by gavron · 2012-03-18 10:21 · Score: 0, Troll

Finally someone posts a succinct and informative financially correct explanation assets, equity, liabilities and debt.
What does he get modded: 2.

moderators: Instead of following each other like lemming looking for the Heh Heh (Nelson Muntz) posts,
and modding everything that bores you down... if you can't be bothered to understand the topic, just leave it alone
and go mod something you do understand. Toilet humor and all that are that way --->

The parent is correct, informative, and on-topic.

You see, dear mods who modded it down, you're affecting future slashdot readers' ability to read this very
informative post. You make slashdot worse.

Remeber what Larry Niven said -- Think of it as Evoution in action. Take the right step, and step off.

E

Re:Slashdot rewards STUPID moderators by mooingyak · 2012-03-18 10:36 · Score: 3, Insightful

So your complaint is that he didn't hit +5 inside of the 11 minutes between when you posted and when he posted?

--
William of Ockham had no beard. The most likely explanation is that it was chewed off by squirrels every morning.
Re:Slashdot rewards STUPID moderators by therealobsideus · 2012-03-18 10:56 · Score: 1

This ^^. Even if a mod abuses his points, it will typically correct itself in the end.
Re:Slashdot rewards STUPID moderators by Anonymous Coward · 2012-03-18 10:57 · Score: 1

Finally someone posts a succinct and informative financially correct explanation assets, equity, liabilities and debt.
What does he get modded: 2.
Yes, the only problem is that he got debit and credit completely the wrong way around, so his explanation is actually not correct at all. Other than that, it's great.
Remember, cash coming into your bank account is recorded as a CR because from the bank's point of view the amount of money they owe you has gone up. If you keep your own books using double entry then you need to record it as a DR.
Re:Slashdot rewards STUPID moderators by eugene+ts+wong · 2012-03-18 14:14 · Score: 1

The truth of the matter is that he started writing 9 minutes after the post that he is complaining about, and had to wait 2 minutes submit.
In the moderators defense, I have often read through a thread, and got the posts ready for moderating, before clicking on submit. The idea is that I want to upmod a whole bunch at the same time, instead of clicking a whole bunch and waiting for Slashdot to load pages.

--
testing out my trending skills
Re:Slashdot rewards STUPID moderators by nitehawk214 · 2012-03-19 01:22 · Score: 1

The truth of the matter is that he started writing 9 minutes after the post that he is complaining about, and had to wait 2 minutes submit.
In the moderators defense, I have often read through a thread, and got the posts ready for moderating, before clicking on submit. The idea is that I want to upmod a whole bunch at the same time, instead of clicking a whole bunch and waiting for Slashdot to load pages.
Although with the javascripty version of the site the moderations take affect right away with no need to click a submit button.

--
I'm a good cook. I'm a fantastic eater. - Steven Brust

It's no different from taxes on bankrupt loans by Barbara,+not+Barbie · 2012-03-18 11:09 · Score: 2

It's no different from going bankrupt, then finding out that you have to declare the portion of any loans you never paid back as "income". Plenty of people got bitten by that when they were foreclosed on, and plenty of students will get bitten by that in the future, now that student loans are a bubble.

--
Let's call it what it is, Anti-Social Media.

Re:It's no different from taxes on bankrupt loans by russotto · 2012-03-18 14:58 · Score: 1

It's no different from going bankrupt, then finding out that you have to declare the portion of any loans you never paid back as "income".
Because that's not actually true. Debt discharged in bankruptcy is not taxable.

Plenty of people got bitten by that when they were foreclosed on
Foreclosures are more complex, but if your home was your only significant asset, or you declared bankruptcy to discharge the residual debt, the cancelled debt likely isn't taxable.
Re:It's no different from taxes on bankrupt loans by Barbara,+not+Barbie · 2012-03-18 15:32 · Score: 1

People were going bankrupt, then the next year getting a tax bill for the principle that was discharged in bankruptcy (because they didn't include the tax liability in the actual bankruptcy).
Plenty of people got gob-smacked with $50k - $100k tax bills after discharge, which is why a temporary law was put in place

People who have lost their homes through foreclosure or who have restructured their mortgage loans may qualify for tax relief under a new tax law, the Mortgage Forgiveness Debt Relief Act of 2007. The tax relief was extended to cover the years 2007 through 2012 under the Emergency Economic Stabilization Act.

Prior to the law being passed, there were people who went bankrupt, had the debt itself discharged, but didn't figure on the tax liability - for example, they did a deed in lieu with the bank the prior year, so they wouldn't list the cancelled debt (since it wasn't a debt any more) when they'd flush their other debts - and if you don't list a debt when you go bankrupt, it isn't discharged. This became a big problem by 2006.

--
Let's call it what it is, Anti-Social Media.

India is Not immune to the problems of the west by Anonymous Coward · 2012-03-18 11:09 · Score: 0

Indian Government is in trouble they are raising taxes across the board so much for the Bric's .....
http://www.bloomberg.com/news/2012-03-16/india-raises-gold-import-tax-for-second-time-prices-drop-1-.html
they have figured out that they also have a problem.....

Re:do they tax frosty piss? by Taco+Cowboy · 2012-03-18 11:21 · Score: 1

âoeThere seems to certainly have been an error in understanding on the part of the Budget makers"

I sincerely think that the Indian budget makers do understand what Angel Funding is

My guess is that the Indian budget makers want everything to be done "Indian Style", that is, they are trying to prevent foreigners from owning any Indian inventions

--
Muchas Gracias, Señor Edward Snowden !

Re:do they tax frosty piss? by Anarke_Incarnate · 2012-03-18 12:16 · Score: 1

Yet "Please give us the codes" appears on how many pages for assistance?

Sounds like a scam to me by Anonymous Coward · 2012-03-18 12:41 · Score: 0

Then again, some of the biggest companies started that way. But in today's scam driven stock market, I would not trust this kind of program without it showing actual / real success.

No problem by frovingslosh · 2012-03-18 12:43 · Score: 0

India wants to impose a 30% tax on these charity investments. We should just read that as they don't want us trying to help anyone in India and butt out of that country's affairs. They will likely consider any form of charity in similar ways, so just to be safe, avoid any form of charity that might go to India.

--
I'm an American. I love this country and the freedoms that we used to have.

Hah! What Has Indian Invented? by curmudgeon99 · 2012-03-18 13:14 · Score: 0

This is rich. They're going to tax Indian entrepreneurs. So, who? What has India invented? The last thing they invented was Sanscrit. The rest has been derivative.
But I will say the only impact this law will have is making sure it stays that way. To a person who lives in the United States, this is comical. "Don't interfere with your enemy when he's committing suicide."

Re:do they tax frosty piss? by Anonymous Coward · 2012-03-18 13:43 · Score: 1

Got to love first post reply whores. Don't have much of a point, but try to get to the top of the heap by replying to unrelated first post.

Who cares if it's borrowing or income... by joshamania · 2012-03-18 14:21 · Score: 1

What it really is is an investment killer. And here I was thinking Illinois has an awful business climate.

Re:Who cares if it's borrowing or income... by phantomfive · 2012-03-18 18:39 · Score: 1

What it really is is an investment killer.
IF you ever write a sentence with 'is' twice in a row, please think twice about it, for the love of English!

--
"First they came for the slanderers and i said nothing."
Re:Who cares if it's borrowing or income... by Anonymous Coward · 2012-03-18 21:45 · Score: 0

Why would anybody love English? English is a fucking slut. Takes on french, german, and scandinavian.. sometimes all in the same sentence!

Sagara by Anonymous Coward · 2012-03-18 16:15 · Score: 0

Switch to your neighbour Sri Lanka. Sri Lanka charges only 0.005%. That is, Rs. 5/- for every Rs. 1000/- invest.

You know by Anonymous Coward · 2012-03-18 17:10 · Score: 0

all the "experts" commenting on how bad it this decision should remind themselves that the decision was arrived by the elected representatives of people of India. This is far far better than some over zealous nitwit in IRS deciding or "interpreting" Tax laws. Lets talk about AMT and then come back to stuff that might hurt [bm]illionaires, shall we?

pc solid sheet by hateu · 2012-03-18 19:31 · Score: 1

pc solid sheet

Reading the article helps by Coeurderoy · 2012-03-18 19:40 · Score: 3, Informative

The budget proposal is much more complex and interesting as it seems.
First it apparently it applies only on money invested by residents, so it would not slow down any foreign investments (although there might be other mecanism impacting this).
Second the 30% tax is not on the investment, but on any money paid for share over the fair market value.

So in short, if I create a company investing 10 K, make some business and show that realistically the company is worth 20 K, and then go to Mr MoneyBag and offers him to invest 20K for 50% of the share, I and hil pay nothing.
If I ask 15K and invest 10K in the capital keep 5K for me and give 50% of the company to Mr MoneyBag (effectivelly selling 5K of shares), I pay nothing.
Now If I ask 20K but make it prudently in two time, 15K "tax free" and then 5K tax "heavy" I would pay 1.5 K in taxes, to be compared to
using the 5K to pay me a salary that would be impacted by taxes and various social costs.

So the real issue will be on "how to evaluate the fair market share of a closely held company" and it's impact on "petty corruption", but the law is rather reasonable, and it encourage entrepreneurs to leave money in their company until it really "runs" rather than cash out at the earliest opportunity.

Re:Reading the article helps by msobkow · 2012-03-19 00:10 · Score: 1

Second the 30% tax is not on the investment, but on any money paid for share over the fair market value.

The problem is that angel investors are not investing based on the current fair market value of a company, but based on their belief in the projections of the future value of the company and it's hoped-for revenue. The very definition of an angel investor is someone who invests in a company before it has any significant market share, and sometimes even before it has any customers.
What's the fair market value of a company with no customers?
Think about that.

--
I do not fail; I succeed at finding out what does not work.
Re:Reading the article helps by Coeurderoy · 2012-03-19 00:44 · Score: 1

Again, check the article,
The tax happens only if the investor "pays" the "current owner".
So if I build my company with 1€, convince the investor that it now is worth 1 billion €, and that he should invest 1 other billion €, and I put this money in the companies account.
Then the investor and i both have 50% of the company.
And there is not tax to pay.
But if I tell him, It is now worth 1Billions, And I would like it all in cash so that I can take some holliday, but do not worry the other worker can go on working long hours and small wages, and BTW you'll have 100% and I'll have hollidays, then you pay 30% taxes.
In a more realistic situation, if you tell the investor:
I need 200 000€ to start commercialisation and demonstrate that there is a real market, so that we can go to a second round, and since you want to have 60% of the company, I want at least 20K, but I will not ask for a raise right now...
Then you'll have to explain that the 180K "new cash" are worth 60% and your "old" investment was worth something like 120+20 (since you keep 40% and get 20K).
If not you'll pay 30% of 20K in taxes.
And to answer your question, the fair value of a company is exactly what the investor is evaluating, and for the tax man a good start is to look at what stays in the company.
So if I have 100 shares, keep 50 and sell 50 to the investor I'll be in "trouble" because there is no easy "comparision".
But if I sell 25, keep 75 and create 75 others by capital influx, then as long as the 25 I get paid in cash are approximatelly worth the 75 that are added to the capital it is easy to demonstrate that the investor at least think that this is a "fair" price.
And if I want a "bonus" I can still sell 20 at the "normal price" (not taxed) and 5 at a "funder price" taxed 30%.
But that would just make it similar to a bonus on the salary.
And if I think this is too much, I should use the capital to pay me a bonus salary and pay taxes on this.
Re:Reading the article helps by msobkow · 2012-03-19 01:20 · Score: 1

But your ignoring the key point: Who determines the "fair value"?
My reading of the article is that either the government or the tax office would be determining "fair value." So what you convince the investor the company is worth is irrelevant -- it's the government that decides when the investment is "excessive."

--
I do not fail; I succeed at finding out what does not work.
Re:Reading the article helps by Coeurderoy · 2012-03-19 02:39 · Score: 1

The point is, that the fair value impacts only the payment that is done to the "shareholder" not to the company.
So even if the government is "unreasonable", wich is not demonstrated (not the the indian government has a very good track record), it does not matter at all as long as the investor really invest.
In practice in the vast majority of cases the angel investissor does not pay the owners anything, it INVEST in the company by creating new shares and putting the money there.
In this case there is not tax whatsover.
so the only thing it does is encourage entrepreuneur to stay in their company even after angel investors invested...

they have a newspaper called FirstPost in India? by Anonymous Coward · 2012-03-18 23:43 · Score: 0

lolwat

Woo Hoo! by JoeMerchant · 2012-03-18 23:44 · Score: 1

Awesome! Go India Go! That's the kind of thinking we (the U.S.A.) need to help us stay competitive in the global marketplace.

Inflationary economy by mangu · 2012-03-19 00:22 · Score: 1

If you want a fast way to get money into an economy you give it to poor people who have a hundred different things that they HAVE to spend it on.

That works only if you have unused production capacity in that country. If the industry has the capacity to produce more than they can sell at any cost above production cost, then it makes sense to distribute income to the people. Otherwise, all you'll accomplish will be inflation.

When you do not have the capacity to produce everything the people demand, then it's better to let the rich have money to invest. And you shouldn't forget that the full production chain is needed, people want finished products, not part assemblies.

This is where Paul Krugman is getting it wrong in his calls for stimulus spending in the US. You can't just add all the unused capacity of all corporations and say that if you give that much to the people the economy will run at full capacity without inflation. The chain is as strong as the weakest link, and the US economy has lots of weak links at this moment.

The same situation happens in India, only more so. There are a billion people there, most of them living below poverty level. They are poor not because they do not have money, they are poor because they have no products available in the market. Let's say you gave every poor family in India the cash they need to buy a refrigerator. Where would the hundred million refrigerators come from?

Give the money to an investor instead, he will build a factory to make refrigerators, that factory will hire people, it will buy materials and subassemblies from other companies, all those companies will pay wages that will end in the hands of the workers. The end result will be people with enough money to buy a refrigerator and refrigerators for sale in the stores.

Re:Inflationary economy by Anonymous Coward · 2012-03-19 06:02 · Score: 0

They are poor not because they do not have money, they are poor because they have no products available in the market.

Do you live on the moon? The poor are poor because they have no money that is the definition of being poor you dunce. It into because they do not have access to a Wallmart or the Internet to buy things that they cannot afford because they have no money.
Re:Inflationary economy by mangu · 2012-03-19 07:47 · Score: 1

Then Zimbabwe is the richest country in the world, everyone there is a trillionaire. Money means nothing if you cannot buy things with it.
Re:Inflationary economy by slowLearner · 2012-03-19 13:36 · Score: 1

Rather than give the money away to investors who will try to make money for themselves, I would propose several a large infrastructure projects. This would improve the lot of everyone, not just the investor. Roads, railways, bridges, tunnels, dams, reservoirs, schools, universities heck even nuclear power stations. These are the things that need to be created in many cases. These types of projects are arguably on of the most influential mechanisms that pulled the US out of the great depression by it's bootstraps and ushered in one of the greatest eras of development and technological advances that the world has ever seen all built on the backbone of infrastructure that is now crumbling and decrepit through neglect.

But NOT a monorail!

Cr/DR mix up by ryzvonusef · 2012-03-19 02:41 · Score: 2

Remember, Assets and Expenses are DEBITED when increased, and vice versa.
Similarly, Income, Equity and Liability are CREDITED, when increased, and vice versa.

The entry you were looking for was:

DEBIT the cash account in Assets
CREDIT the Paid In Capital account in Equity.

Also

DEBIT the cash account in Assets
CREDIT the Long Term Debt Account in Liabilities.

Minor error, but with major impact. Thought it ought to be rectified, to prevent confusion.

--
I am an ACCA student. Got a query on Accountancy/Finance? Maybe I can help!

Re:do they tax frosty piss? by Anonymous Coward · 2012-03-19 03:09 · Score: 0

Yeah, but if you read your threads "most recent first", the "first posts" are actually the last posts. :)

Specific exemption for VC-funded entities by qaqa · 2012-03-19 04:12 · Score: 1

The summary is completely misleading. The proposed amendment specifically provides an exemption for VC funded companies. From the proposed Finance Bill -

"(viib) where a company, not being a company in which the public are substantially interested, receives, in any previous year, from any person being a resident, any consideration for issue of shares that exceeds the face value of such shares, the aggregate consideration received for such shares as exceeds the fair market value of the shares:
Provided that this clause shall not apply where the consideration for issue of shares is received by a venture capital undertaking from a venture capital company or a venture capital fund"

Now, there may be situations where a start-up is unable to use this exemption [say, where the investor is not registered as a VC fund in India]. There are trivial work-arounds for such cases, which any decent tax advisor can come up with. [Eg: Issue shares at face value, but with lower voting / dividend rights etc].

Long story short, I don't expect things to change in any meaningful manner on the ground.

PS: Last year, the tax department identified several cases where kickbacks from govt projects were disguised as share investments at very high premiums. The tax department seems to have brought in a (half-baked) proposal to stem such money laundering.

PPS: IAACA, sadly

the big sharks are bribing the indian legislators by Anonymous Coward · 2012-03-19 04:29 · Score: 0

its obvious whos hand is behind this "law" what a flaw

Re:do they tax frosty piss? by ashtophoenix · 2012-03-19 05:22 · Score: 2

Quoted from TFA:

In Budget lingo, this pertains to cases “where a company, not being a company in which the public are substantially interested, receives, in any previous year, from any person being a resident, any consideration for issue of shares that exceeds the face value of such shares, the aggregate consideration received for such shares as exceeds the fair market value of the shares: Provided that this clause shall not apply where the consideration for issue of shares is received by a venture capital undertaking from a venture capital company or a venture capital fund”.

It clearly says resident. How is it trying to prevent foreigners??

--
Life is about being a Phoenix!

You can download tax calculations from here by NewYork · 2012-03-19 05:40 · Score: 1

http://www.ynithya.com/taxcalc/

--
Casteism

expect even more now by Anonymous Coward · 2012-03-19 16:51 · Score: 0

Government has turned a BLIND EYE to corruption. And it is increasing tax day by day to fund the never dying desire of corrupt people to make money. Even Anna Hazare movement did not pick up.

Incidently, people who came out in support of Anti Corruption (middle and upper class) are quite benefitted by it. The poor people (Dalits, SCST) who are most impacted by it were missing.

Slashdot Mirror

Indian Government To Tax Angel Funding

157 comments